#4:. PIPELINE VANDALISM
Even if the refineries are in top shape, their optimal performance still depends on the availability of services from other facilities associated with their operations.
The volume of refined products supplied depends directly on availability of crude oil feedstock. If crude oil is lacking because the pipelines are repeatedly attacked by vandals, there is no magic anybody can perform to guarantee sufficient products supply to consumers.
The result would be scarcity and more fuel crisis.
The NNPC says its biggest headache in its bid to find lasting solution to the fuel crisis over the years has been how to deal with pipeline vandalism.
The corporation says over the last decade, it has reported a total of 16,083 pipeline breaks in different locations in the country, with ruptures accounting for 398 pipeline breaks, while 15,685 breaks were due to the activities of vandals.
But the deeper issue has to do with reports that pipeline vandalism appears to be a very sophisticated insider crime with connivance of agents linking to even the highest reaches of the NNPC management echelon.
That President Muhammadu Buhari recently threatened to treat persons involved in oil pipeline vandalism and other sabotage activities in the oil and gas industry like terrorists or saboteurs shows how frustrating the problem has been to the government, industry and Nigerians.
#5:. FUEL IMPORTATION CONSTRAINTS
To make up for the balance of supply from the refineries, government’s only viable option has been to import.
Although that has been going on these years, the huge cost to the economy justifies why local production is still the best way out.
Because crude oil and its derivatives – refined petroleum products – are subject to the gyrations of forces at the international oil market, a spike in crude oil price directly impacts retail prices of refined petroleum products at filling stations.
With government opting to subsidize the difference between the landing cost of imported petroleum product and retail price above N86 per litre, it means huge amounts has to be paid as subsidy to petroleum products marketers for fuel imports.
But the corruption in the fuel subsidy arrangement made the arrangement very unattractive for the present administration, which at inception found it difficult to continue the payment of the subsidies.
After inception, government inherited a backlog of over N600 billion subsidy bill due to marketers. Coming at a time the country’s economy was bleeding from declining revenue earnings as a result of low global crude oil prices, paying the huge bill became a huge burden and a bitter pill for government to swallow.
Although part of the money was paid in November 2015, it was hardly enough incentive for all the marketers to continue fuel importation.
Apart from unpaid subsidies, claims for arrears of interests on bank loans, and differentials in foreign exchange made the new fuel price unattractive for the marketers. The result has been the scarcity and fuel crisis.